This invention relates generally to forecasting and replenishment processes, and more particularly, the present invention relates to a method for managing collaborative forecasting and replenishment processes over a computer network.
Businesses are continuously striving to find new and better ways to improve their inventory management processes in order to reduce business risks. One of the reasons why current inventory management systems fail is due to ineffective demand forecasting methods and deficient supply replenishment processes utilized by supply management teams across many industries. Predicting future demand for goods and materials is fraught with uncertainties which are further fueled by dynamic economic conditions and fluctuating markets. This instability can make forecasting future supply needs especially difficult for the manufacturing industry. For example, if the manufacturer finds either an increased or reduced demand in the product compared to its forecast, strain is placed throughout the supply chain where overstocking or depletion of components can occur quickly. In addition, if the supplier cannot deliver the components, manufacturers will often not be able to react quickly to meet demand, seek alternative sources, etc. Without keeping large stock of components on hand at the manufacturer's site, supply problems occur readily. However, keeping large stock has additional problems of its own, such as higher storage costs, an increased loss probability because components become outdated, etc. Moreover, electronic parts tend to reduce in value with time (i.e., a part that the manufacturer purchases in January will cost less in March and much less in June and so on).
Various solutions have been developed to improve existing inventory management systems such as storage warehouses or replenishment centers for facilitating quick and easy access to goods creating a buffer in the event of a sudden change in demand. By adding a third player to the supply chain process, however, additional problems in inventory management are presented. For example, coordinating supply requirements and forecasts, changes to these requirements, and their corresponding delivery schedules can be cumbersome and prone to error. Multi-party communications between supplier, warehouse, and buyer must be consistently accurate and reliable otherwise a breakdown in the supply chain can occur creating a ‘chain effect’ of inventory delays, and/or inaccuracies.
Software systems have been developed to address inventory replenishment problems utilizing various techniques. Such software systems are generally targeted to satisfying specific needs within a supply chain subprocess and are not equipped to manage a complete end-to-end collaborative forecast and replenishment cycle.
As the manufacturing world begins to move to build-to-order environment, greater demands are expected from the manufacturer to lower total costs in the complete supply chain, shorten throughput times, reduce stock to a minimum and provide more reliable delivery dates without constraining production due to supply issues.
What is needed, therefore, is a way to integrate and manage collaborative forecasting and replenishment processes over a computer network.